PHOENIX (Friday, February 01, 2013) -- Attorney General Tom Horne today announced that his office, the Attorneys General of 44 other states and the District of Columbia have reached a $120 million multi-state settlement with Lender Processing Services, Inc. and its subsidiaries, LPS Default Solutions and DocX.

The proposed settlement, in the form of a consent judgment, resolves allegations that the Jacksonville-based company, which primarily provides technological support to banks and mortgage loan servicers, “robo-signed” documents and engaged in other improper conduct related to mortgage loan default servicing. When entered by the court, the consent judgment will require LPS and its subsidiaries to reform their business practices and, if necessary, to correct executed documents to assist affected homeowners. Arizona’s share of settlement is approximately $ 3.7 million.

“This settlement prohibits LPS and its subsidiaries from engaging in any further misconduct and requires LPS to provide remediation to those homeowners adversely affected by its conduct,” said Horne. “I will continue to bring to justice those who have violated Arizona law and played a role in Arizona’s foreclosure crisis.”

Among other things, the consent judgment will require proper execution of documents and prohibit signature by unauthorized persons or those without first-hand knowledge of facts attested to in the documents, enhanced oversight of the default services provided, and a review of all third-party fees to ensure that the fees have been earned and are reasonable and accurate. The settlement also accomplishes the following:

Prohibits LPS (including DOCX) from engaging in the practice of surrogate signing of documents;

Ensures that LPS has proper authority to sign documents on behalf of a servicer, if in fact it is signing documents;

Requires LPS to accurately identify the authority that the signer has to execute the document and where that signer works;

Prohibits LPS from notarizing documents outside the presence of a notary and ensures that notarizations will comply with applicable laws;

Prohibits LPS from improperly interfering with the attorney-client relationship between attorneys and services;

Prohibits LPS from incentivizing or promoting attorney speed or volume to the detriment of accuracy;

Requires LPS to ensure that foreclosure and bankruptcy counsel or trustees can communicate directly with the servicer;

Requires LPS to have enhanced oversight and review of processes over third parties it manages, including those entities that perform property preservation services;

Prohibits LPS from imposing unreasonable mark-ups or other fees on third party providers’ default or foreclosure-related services;

Requires LPS to establish and maintain a toll-free phone number for consumers concerning document execution and property preservation services (including winterization, inspection, preservation, and maintenance); and

Requires LPS to modify mortgage documents that require remediation when LPS has legal authority to do so and when reasonably necessary to assist a consumer or when required by state or local laws.

In the proposed settlement, LPS stipulates to important facts uncovered in the investigation, including the practice by DocX of so-called “surrogate signing,” the signing of documents by an unauthorized person in the name of another and notarizing those documents as if they had been signed by the proper person, as well as other improprieties in the document execution and recordation or filing process.

Once the judgment is entered by the courts, LPS will undertake a review of documents executed during the period of January 1, 2008 to December 31, 2010 to determine what documents, if any, need to be re-executed or corrected. If LPS is authorized to make the corrections, it will do so and will make periodic reports to the Attorney General of the status of its review and/or modification of documents. Consumers may also call a toll-free number established and staffed by LPS to request review and correction of any documents executed by LPS at any time. The number will be operational shortly after approval of the Consent Judgment.